While investor lending is trending down in NSW, new finance commitments were still $3.1 billion higher than that taken out by owner-occupiers in the year to July. In fact, investors in NSW have borrowed more since the early days of the Sydney market upswing in July 2013.

However, the gap between the two buyer groups is closing. In the year to July, investors borrowed $65.2 billion for housing across NSW, down 12.2 per cent from the previous year. Meanwhile, the value of owner-occupier lending in NSW grew 7.2 per cent.

The dominance of investor lending in NSW is likely a reflection of affordability constraints for new buyers, and the high purchasing power of more seasoned buyers.

Property investment gives buyers more purchasing power through rental income, which can help cover mortgage repayments. Those with an existing property portfolio may be drawing on equity to overcome the deposit hurdle relatively easily.

In Victoria, owner-occupiers are not only borrowing more than investors, but owner-occupiers had the fastest growth in lending over the year of all states and territories (13.7 per cent).

Investor lending in Victoria fell 4.2 per cent in the the year to July – which ties with the ACT as smallest decline across the states and territories.

Investor lending declined the most in the Northern Territory, where investor finance fell 22.7. per cent, followed by Queensland, at 18.8 per cent.

As Queensland investors shy away from the market, owner-occupier lending grew a modest 0.7 per cent in the year to July.

Over the past four years, Queensland has seen the largest divergence in lending between Investors and owner-occupiers, of over $15 billion.

The only state to see growth in the value of investor lending was Tasmania, where the value of new investor loans rose 9.0 per cent.

Despite the strong growth in investment lending in Tasmania, owner-occupier lending is still more than double the value of investor loans, at $2.4 billion in the year to July.

This is further reflected in astonishing dwelling price growth across Hobart, with Domain data suggesting Hobart houses are up 15.9 per cent in the year to June, and units increased 22.6 per cent.

The only regions to see a decline in both owner-occupier and investor finance commitments, were Western Australia (-5.7 per cent) and the NT (-2.8 per cent).

This suggests that wide-reaching credit tightening policies may be exacerbating poor conditions in these markets.